Sap SD Organizational Structure Complete Guide

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Introduction

This article introduces sap sd Organizational Structure. We will take an Example company called ABC, Inc. After going through this article you will be able to describe sap sales and distribution organizational structure.

If this your first time reading an SAP-related article I strongly suggest you to go through What is SAP Software.

Business Example

Your company ABC, Inc is a part of worldwide, globally recognized ABC group.
ABC, Inc manufactures & sells Laptops. Required materials are delivered from plants in Europe and America.
Also, your company offers assemblies and spare parts for sold laptops.
There are authorized dealers that only sell ABC, inc’s products

SAP SD Organizational Structure

Following is a quick snapshot of SAP SD enterprise structure of ABC holdings. Please keep in mind that ABC group is divided into several independent operating subsidiaries. For the org structure, we have selected ABC AG in Frankfurt instead of ABC US in New York.

In SAP organizational units represents the structure of the organization. Simply organizational Units are legal or/and organizational units in an enterprise. I SAP we are using several company units to map sales and distribution procedure. Sales organization, distribution channels are some examples. Let’s review one by one and learn what these organization units are.

What is Company Code in SAP?

A Legal entity of a company.
Independent Accounting Unit.
At the company code level, we can create P&L statements and balance sheets which are required by the law.

Company code can be identified as the tiniest organizational unit when it comes to external account. This includes the creation of all the proofs required by the government and external entities. In simple language, Company Code in SAP is a subsidiary or a company inside a corporate group. In our example company, ABC AG & ABC US are company codes.

What is Sales Organization in SAP?

Shipping out goods and services. (Product & Service distribution)
Arranging Sales Conditions
Product Liability
Product rights of recourse.

Sales organization groups the company according to its sales and distribution requirements. Selling and distributing services & materials are the main responsibilities of a Sales Organization. Sales Organization can be a national, regional or intl subdivision of a subsidiary. (Company Code). Sales Organization has follow relationship with the Company Code. In our example, Sales Frankfurt & Sales Berlin are Sales organizations of the Company Code ABC AG.

sap sales organization relationship with company code

This means that a Sales Organization has only one Company Code. However, many sales organizations can be assigned to one company code.

What is Distribution Channel in SAP?

How materials each the customer?
Represent the shipping strategy of distributing products and services to customers.
You can define responsibilities, analyze sales statistics and carry out pricing structures.

According to the above graph in SAP SD Organizational Structure a distribution channel can have only one sales organization while one sales organization can have multiple distribution channels. Distribution channels can be wholesale trade, retail trade, internet trade, etc. In our example, Reseller & Services are distribution channels in Sales Frankfurt SAP SD sales organization.

What is Division in SAP?

SAP Division represents a product line. In our example Laptops, Spare Part & Services are Division of ABC Company. The sales division has the following relationship with the Sales Organization.

In SAP SD Division you can do the following processes.

Restrict price agreements with a client to a particular sales division.
Carry out statistical analysis by division.

What is Sales Area in SAP?

In the SAP Sales and Distribution Module, the sales area is the combination of the Sales Division, Distribution Channel & Sales Organization. The main responsibility of a Sales Area is to define a distribution channel that a sales organization utilize to sell goods from a particular division. Each sales document is assigned to only one sales area.

In the above Organization, we can create the following Sales Areas.

1 + 2 + 4 = Sales Area X
1 + 2 + 5 = Sales Area Y
1 + 3 + 6 = Sales Area Z

SAP Plant & Storage Location

Simply put plant is a place where we stock material. However, it can even represent a production facility of the company. Plants & Storage locations can be used by all the logistic areas of the system.

In SAP SD Plant is a place we use to distribute products and services. But since Materials Management is mainly concerned with material flow. In SAP MM point of view, a plant is a place where material stock is kept. But in production planning Plants are considered as a manufacturing facility.

Each plant is connected to a company code.
A plant can be assigned to several combinations of sales organizations/distribution channels vice versa.

What is SAP Shipping Point?

The Shipping point for inbound and outbound deliveries is the independent organizational unit in the SAP SD module. Therefore the delivery of goods and services at the maritime point plays an important role.

“Shipping point is a place or location where the goods and services are delivered to the customers”.

This concludes SAP SD Organizational Structure. Please keep in mind till you get familiar with what is SAP and full sales procedure you won’t understand the true definition of the Organization structure.

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Sources/ References

https://www.tutorialspoint.com/sap_sd/
https://searchsap.techtarget.com/definition/SAP-Sales-and-Distribution-SAP-SD
https://archive.sap.com/discussions/thread/488329
https://www.slideshare.net/kadalik/sap-enterprise-structure-example